RELATING TO CONSUMER PROTECTION.
HB1642 is a consumer protection measure aimed at digital financial asset transaction kiosks, commonly known as cryptocurrency ATMs or cryptoATMs. The bill finds that these kiosks are increasingly being used in scam schemes, especially against older adults, where victims are coached over the phone to withdraw cash and convert it into cryptocurrency sent to a scammer-controlled wallet. The legislature cites national complaint and loss data to support the conclusion that these kiosks pose a significant financial risk to residents.
Beginning October 1, 2026, the bill makes it an unlawful practice for an operator to own, operate, or manage in Hawaii any kiosk that accepts U.S. currency from a customer in exchange for a digital financial asset. The prohibition is limited to cash-to-crypto transactions; kiosks may still operate for transactions involving digital financial assets exchanged for other digital financial assets or for U.S. currency. Each violating transaction is treated as a separate offense. The bill also defines key terms such as “digital financial asset,” “cash,” “digital financial asset transaction kiosk,” and “operator,” and it amends chapter 481B, Hawaii Revised Statutes, to add this new consumer protection rule.
The bill’s impact is to create a new state-level unlawful practice under Hawaii’s consumer protection law and effectively ban crypto kiosks that take cash or card payments for cryptocurrency. This would directly affect kiosk operators, cryptocurrency exchange services, and related businesses in the state, while also limiting a payment method that law enforcement and consumer advocates say is commonly used in fraud. It does not ban digital asset activity generally, only the kiosk model involving U.S. currency purchases.
The overall sentiment reflected in the bill’s findings and the voting history is strongly supportive of the measure. The bill advanced through Senate committees unanimously or near-unanimously, and conference votes were also favorable, indicating broad legislative agreement that the consumer fraud risk justified intervention. The discussion embedded in the bill text emphasizes the scale of losses, the difficulty of recovering stolen funds, and the vulnerability of older residents, all of which frame the bill as a protective response rather than a regulatory expansion for its own sake.
The main point of contention is the breadth of the remedy: instead of imposing disclosure, transaction limits, or enhanced safeguards, the bill chooses a near-total prohibition on cash-based crypto kiosk transactions. That approach could be viewed as burdensome by kiosk operators and parts of the digital asset industry, which may argue that the bill restricts legitimate consumer access to cryptocurrency and targets a technology rather than bad actors. Supporters, however, appear to prioritize fraud prevention and recovery limitations over preserving kiosk availability.
HB1642 amends chapter 481B, Hawaii Revised Statutes, by creating a new unlawful practice for digital financial asset transaction kiosks that accept U.S. currency from a customer in exchange for a digital financial asset. Starting October 1, 2026, operators who own, operate, or manage such kiosks in Hawaii would be subject to the new prohibition, and each violating transaction would count as a separate offense. The bill leaves room for kiosks that exchange digital financial assets for other digital financial assets or for U.S. currency, but it bars the cash-to-crypto kiosk model that the legislature identifies as especially vulnerable to fraud.
The bill appears to have strong legislative support and a broadly protective tone. Committee and conference votes were overwhelmingly favorable, with no recorded opposition in most stages and only one dissenting vote in House conference. The findings in the bill reflect a clear concern about scam activity, especially targeting older adults, and frame the measure as a necessary consumer protection response to documented financial losses and difficulty recovering stolen funds.
The central policy dispute is whether Hawaii should prohibit cash-based crypto kiosks outright or instead regulate them more narrowly. Supporters view the kiosks as a major fraud vector and emphasize the scale of losses, the use of coercive scam tactics, and the inability of victims to recover funds once transferred. Opponents, likely including kiosk operators and cryptocurrency industry stakeholders, would be expected to argue that the bill is overbroad, could limit legitimate access to digital assets, and targets a lawful technology rather than focusing solely on fraud prevention and enforcement against scammers.